Chinese regulators ordered internet giant Tencent to end exclusive contracts with music copyright holders

BEIJING – Internet giant Tencent has been urged by regulators to end exclusive contracts with music copyright holders, in addition to increased enforcement of anti-monopoly rules and others as Beijing tightens its control over booming online industries.

Tencent controls more than 80% of “exclusive music library resources” following its 2016 acquisition of China Music Group, the State Administration for Market Regulation said on Saturday. He said this gives Tencent the ability to get better deal than competitors or limit the ability of competitors to enter the market.

In order to “restore competition in the market,” Tencent must end exclusive music copyright contracts within 30 days, the market regulator said in a statement. The company is prohibited from requiring suppliers to offer better terms than those received by competitors.

Tencent promised on its social network account to “conscientiously comply with the decision.”

Regulators are stepping up enforcement of anti-monopoly, data security, financial and other rules against Tencent, e-commerce giant Alibaba Group, and other companies that dominate entertainment, retail and other industries.

The application of the law has hurt the market value of some companies. Shares of ridesharing service Didi Global Inc., which debuted on the U.S. stock exchange last month, are down 21% after regulators announced an investigation into “its network security” and ordered the company to review the processing of customer data.

Regulators have publicly warned large companies not to use their dominant market position to ward off new competitors.

Tencent was barred by regulators on July 10 from combining its Douyu and Huya gaming platforms on the grounds that it could reduce competition.

China’s internet regulator on Wednesday berated Tencent, Alibaba, microblogging platform Sina Weibo and e-commerce service Xiaohongshu for allowing the distribution of sexually suggestive stickers or short videos of children on their services.

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PA researcher Henry Hou contributed to this report.

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